Nifty has opened on strong note and continued to move up during the day and closed virtually at the high of the day which is clearly indicating that bulls are in charge of the market. Nifty has now come to 5150 levels which it has failed to move past atleast two times in the last one and half month. And any failure to go past this time would be check mate for the bulls and bears would take control of the market and in that case i am sure that market might go below the november lows. nifty has to atleast move above and close above 5150 level for atleast 3 days, preferably above the 5200 for bulls to take charge. Now we will see what technicals are indicating. Technicals generally given what the undertone is and market generally follows the same. If you can see from the chart below there is Huge -ve divergence between nifty and RSI which does not augur well for the market. while RSI is moving down the market is moving up which is clearly indicating that undertone appears to be weak. It may also be seen that the MACD histogram is clearly showing -ve divergence which is also indicating that the undertone is weak.
Directional Momentum index which is one of my favorite which given the strength of the current trend is flat and is placed at 16 which is clearly indicating that the current up move lacs strength.
All these are clearly indicating that even though markets are moving up they lack strength and when ever reversal happens it would be to a larger extent. My policy is follow the trend, even though the oscillators are showing weakness market is moving up so eigther be with the market or do not trade.
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